Board of Directors Agreement Template (US)

Record the appointment; do not purport to make it

This template opens with a recital that the director has been elected or appointed under the charter and bylaws with effect from a stated date, and that the agreement records the terms of service. That single change makes the document accurate and forces the corporation to do the thing that actually matters: pass the resolution, update the records of directors, obtain the director's consent to serve, and make any filing that names directors.

It also asks the corporation to confirm that the appointment has been recorded, which is a check on the most common administrative failure in small-company governance.

Be honest about the term and removal

Under Delaware law and its equivalents, stockholders may remove a director, and the charter may set a classified board or a different mechanism. A contractual term does not override that power. Promising a two-year term without saying so leaves the director with an expectation the corporation cannot deliver.

This template states the intended term, says expressly that it does not limit any right of the stockholders or the board to remove or not re-elect the director under the governing documents and applicable law, and separately provides what the director is paid up to the date service ends — which is the practical protection a fixed term is usually reaching for.

Write an indemnity that actually works

'The Company shall indemnify the Director to the fullest extent permitted by applicable law' is a headline without a mechanism. Delaware corporation law permits indemnification of directors on stated conditions, permits advancement of expenses, and allows a corporation's certificate of incorporation to exculpate directors from monetary damages for breach of the duty of care — but not for breaches of the duty of loyalty, acts not in good faith, intentional misconduct, knowing violations of law, or transactions from which the director derived an improper personal benefit.

This template therefore does four things the source does not: it refers to the charter, bylaws and any separate indemnification agreement as the operative source of the protection; it includes advancement of expenses with the customary undertaking to repay if indemnification turns out not to be available; it states the carve-outs honestly rather than implying blanket protection; and it requires prompt notice and cooperation on claims.

Commit to D&O insurance including run-off

Directors' and officers' policies are written on a claims-made basis, so a claim brought after a director leaves may fall outside the policy in force. A promise to maintain cover 'during the term of service' is therefore worth much less than it sounds.

This template records the policy limit, requires cover to be maintained throughout service, and requires run-off or tail cover for a stated number of years after the director leaves — with a right to see the policy and to be told if it is cancelled or materially changed. That is the single most valuable clause in the document for a non-executive.

Give conflicts a procedure, not just a duty

The source asks the director to disclose conflicts and abstain. Real practice needs more: an up-front schedule of other directorships and interests, a duty to update it, a defined process for a transaction in which the director is interested — disclosure of the material facts, approval by disinterested directors or by stockholders, and a record in the minutes — and a rule about board papers on a matter the director is recused from.

This template also carves confidentiality obligations so they cannot be read as preventing lawful communication with a government or regulatory authority about a possible violation of law. A confidentiality clause that appears to impede protected whistleblower communications is a real enforcement risk, and it costs nothing to draft it properly.

Quantify the commitment and the pay

'Sufficient time and attention' is not a commitment anyone can hold either side to. This template records the expected number of board meetings and committee meetings a year, an estimated total time commitment in days, the notice for meetings, and the expectation about attendance in person versus remotely.

On pay, it records the annual fee, any per-meeting fee, whether equity is granted and under which plan and vesting schedule, the expense policy, and the tax position: director fees paid to a non-employee director are generally self-employment income reported on an information return rather than payroll wages. It also handles the nonprofit case, where directors commonly serve unpaid and the corporation is expected to have a written conflict-of-interest policy.

Clause-by-clause guide

Recital of appointment

Records that the election or appointment was made under the charter and bylaws, and that this agreement sets the terms of service only.

Role and duties

The oversight role, the duties of care and loyalty, preparation for meetings, and the boundary against day-to-day management.

Term, removal and re-election

The intended term, stated without overriding the stockholders' or board's power to remove or not re-elect.

Time commitment

Expected meetings per year, committee work, estimated days, and attendance expectations.

Fees, equity and expenses

Annual fee, meeting fees, any equity award and its plan and vesting, expense policy and the tax treatment of fees.

Other directorships and interests

The schedule disclosed on joining and the duty to keep it current.

Conflicts procedure

Disclosure of material facts, approval by disinterested directors or stockholders, recusal, minutes, and board-paper handling.

Confidentiality

Protects non-public information, survives departure, and expressly preserves lawful communications with regulators.

Indemnification and advancement

Points at the charter, bylaws and indemnification agreement, adds advancement with the repayment undertaking, and states the carve-outs honestly.

D&O insurance and run-off

Cover maintained during service plus run-off for a stated period afterwards, with notice of cancellation or material change.

Independent advice

The director's right to take independent professional advice at the corporation's expense in appropriate circumstances.

Resignation and return of property

Notice of resignation, return of board papers and devices, and removal of system access.

Status

States that serving as a director does not by itself create employment, and covers the case where the director is also an officer or employee.

US compliance checklist

Board service is governed by the corporation statute, the charter and the bylaws — the agreement sits underneath all three.

• Make the appointment properly and record it

  Elect or appoint the director under the charter and bylaws, minute the resolution, obtain their consent to serve and update the corporation's records of directors. The agreement records terms; it does not make the appointment.

  Delaware General Corporation Law, subchapter IV

• Do not draft around the removal power

  Stockholders' power to remove directors, and the mechanics for classified boards, come from the statute and the charter. A contractual term cannot displace them, so state the term without implying it can.

• Follow the interested-director procedure

  Where a director has an interest in a transaction, disclose the material facts and obtain approval by disinterested directors or by stockholders, and record it. Doing so is what protects the transaction from later challenge.

• Check what indemnification and exculpation the charter actually gives

  Delaware law permits indemnification and advancement on stated conditions and allows charter exculpation for duty-of-care breaches — but not for breaches of loyalty, bad-faith acts, intentional misconduct, knowing violations of law, or improper personal benefit. Read the charter and bylaws before relying on the agreement.

• Keep confidentiality clauses whistleblower-safe

  Do not draft confidentiality terms that could be read as impeding communications with a government or regulatory authority about a possible violation of law. Include an express carve-out.

• Get the tax reporting right

  Fees paid to a non-employee director are generally treated as self-employment income and reported on an information return rather than through payroll. Confirm the treatment with your tax adviser before the first payment.

• Nonprofit boards: check compensation and policy requirements

  Directors of nonprofit corporations commonly serve without compensation, and the annual federal information return asks whether the organization has a written conflict-of-interest policy. Confirm what the bylaws and state nonprofit act allow before agreeing any fee.

• Public companies: check the additional layer

  Listed companies have exchange independence standards, committee composition rules, disclosure obligations on director appointments and departures, and insider-trading policies that this agreement should reference rather than restate.

How to complete the board of directors agreement

1. Confirm the appointment first. Pass the resolution appointing or electing the director, obtain their consent to serve and record it — then complete this agreement.
2. Enter the term and time commitment. Add the start date, intended term, expected number of board and committee meetings and the estimated days per year.
3. Set the compensation. Add the annual fee, any meeting fee, the equity award and its plan and vesting, and the expense policy — or mark the role unpaid.
4. Attach the interests schedule. List the director's other directorships and interests, and confirm the duty to keep the list current.
5. Confirm indemnification and insurance. Reference the charter, bylaws and any indemnification agreement, and record the D&O policy limit and the run-off period.
6. Sign and file. Both parties sign, the corporation files the agreement with the corporate records, and the director keeps a copy with the resolution.

Frequently asked questions

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